After the shakiness of top executives due to pay limit imposed by the government pay czar, American International Group Inc. (AIG) announced a few executive changes on Monday.
Its chief administrative officer (CAO) Jeff Hurd has been replaced by Michael Cowan of Merrill Lynch. Hurd will now head human resources. Also, AIG’s senior vice president of communications Nick Ashooh is joining Alcoa Inc. (AA) as head of corporate affairs. Christina Pretto will assume the responsibilities of Ashooh at AIG. Pretto joined AIG about a year ago after working with Citigroup Inc. (C).
AIG received federal support worth $182.5 billion, which rescued it from collapse in Sep 2008. In exchange, the government now owns nearly 80% of the company. Recently, in a major revelation, CEO, Robert Benmosche disclosed his intention of repaying the bailout money back to the U.S. government within the next two years. For this, AIG expects to use earnings from business operations and also by disposing unnecessary businesses in the near term.
In the last week of 2009, AIG’s Vice Chairman and general counsel Anastasia Kelly resigned due to federal pay restraints on her compensation. However, AIG intends to pay about $2.8 million toward severance to its ex general counsel.
Kelly was among the five executives who notified on Dec 1, 2009, that they would resign and collect severance benefits if their pay was cut significantly by the U.S. pay czar. The other four executives withdrew their notices later.
However, the concerns that need attention along with the repayment of government money are the improvement in overall aggressive managerial efficiency, regenerating confidence among the dispirited staff and withstanding consistent pressure from the U.S. government to sell assets quickly to repay debt. These issues have to be dealt with head-on immediately to help revive AIG.
On Monday, the shares of AIG closed at $29.89 on the New York Stock Exchange, down slightly from previous day’s closing price of $29.98.
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